Russia And South Africa To Create OPEC ‘Platinum Cartel’

Today’s AM fix was USD 1,591.00, EUR 1,243.75 and GBP 1,052.39 per ounce.
Yesterday’s AM fix was USD 1,597.25, EUR 1,241.35 and GBP 1,052.21 per ounce.

Silver is trading at $28.35/oz, €22.27/oz and £18.84/oz. Platinum is trading at $1,576.50/oz, palladium at $756.00/oz and rhodium at $1,200/oz.

Gold fell $5.30 or 0.33% and closed yesterday at $1,599.10/oz. Silver finished -0.38% with a low of $28.62.


Precious Metals and Currencies Table – (Bloomberg)

Gold is slightly lower in most major currencies this morning but is higher in euros and Swiss francs. 

Gold appears to be consolidating near the $1,600/oz level and worries about the euro zone’s fiscal health are supporting prices as is the EU’s unprecedented expropriation of bank deposits in Cyprus.

There are hopes that Cyprus will complete capital control measures today to prevent a run on the banks by rightfully nervous depositors. 


Platinum in USD – (Weekly 10 Years) – Bloomberg

Russia and South Africa, which together control about 80% of the world’s reserves of platinum group metals, plan to create a trading bloc similar to OPEC to control the flow of exports according to Bloomberg.

“Our goal is to coordinate our actions accordingly to expand the markets for realization of these metals,” Russian Natural Resources Minister Sergey Donskoy said yesterday in an interview at a summit of leaders from Brazil, Russia, India and South Africa in Durban. “The price depends on the structure of the market, and we will form the structure of the market.”

South Africa mines about 70 percent of the world’s platinum, while Russia leads in palladium, a platinum group metal used in autocatalysts, with about 40% of output, according to a 2012 report by Johnson Matthey Plc.

Palladium rose 0.8% yesterday to $763.50 after Donskoy’s comments, reversing declines to reach the highest level since March 18. Platinum, used to make jewelry and autocatalysts, has risen 2.3% this year because of increased demand from the auto industry and after supply disruptions at mines. The price jumped yesterday in the hour after Donskoy’s comments, narrowing yesterday’s decline.

South African Mines Minister Susan Shabangu confirmed that the two countries aimed to counter oversupply of platinum, and said possible measures could include taxes and incentives.

No ‘Cartel’

“We’re not really controlling the market,” she said in an interview in Durban. “We want to contribute without creating a cartel, but we want to influence the markets.”

Other producers will be invited to join the bloc, which will be similar to the Organization of Petroleum Exporting Countries, Donskoy said. The aim will be to open up new markets rather than limit exports, he said.

Zimbabwe, Canada, and the U.S. are among other major platinum group metals producers.

Russian and South African officials signed a memorandum of understanding today to cooperate in the industry.

“We are now forming working groups to work out joint actions on this market,” and aim to coordinate export volumes, Donskoy said. “There will be a meeting in the summer to discuss mechanisms in detail.”

Anglo American Platinum Ltd is the world’s largest producer of platinum, while Russia’s OAO GMK Norilsk Nickel is the largest producer of palladium globally.

Platinum in USD Adjusted for Inflation (CPI)  – 1970-Today – Sharelynx

Credit Suisse are bullish on the PGM’s of platinum and palladium. They favour them over gold and silver as they say that they are more cyclical and less dependent on investment flows. Therefore they believe that there is more upside likely for platinum and palladium.

We believe that due to the very favourable supply demand dynamics in the platinum market, it should rise well above the inflation adjusted record high from 1980 at $2,700/oz in the coming years from $1,571/oz today.

While gold is down about 5% this year and silver down about 6.5%, palladium is up 7.9% and platinum up 2.2% showing the diversification benefits of having an allocation to the PGM metals.

NEWS  
Gold futures inch higher after 3-day loss streak – Market Watch

Gold stays put as upbeat U.S. data offsets Europe worries – Reuters

Gold Heads for Worst Quarterly Run Since 2001 on U.S. Economy – Bloomberg

Global Pool of Triple A Status Shrinks 60% – CNBC

COMMENTARY
Invest in Gold or Your Bank Account Could be ‘Cyprused’ – The Daily Reckoning

Whom to Believe on Gold: Central Banks or Bloomberg? – Casey Research

Get Ready: Cyprus Readies Capital Controls to Avert Bank Run – CNBC

Cypriot bank crisis boosts demand for gold – The Telegraph

For breaking news and commentary on financial markets and gold, follow us on Twitter.


Mark O'Byrne

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